For me an under-appreciated aspect of rideshare is the accountability. I’ve had reason to report taxi drivers and the companies generally do everything they can to not have to do anything about it. There really doesn’t seem to be incentive for each individual driver to be honest, let alone provide a great service.
Yeah I think so. I don’t want leveraged. I just want as if I bought Euros. In 2008 the dollar tanked vs. the Euro. I expect this to be worse if we crash.
And it could matter a lot to me if I resume my trip where I won’t just be buying American stuff, which still costs the same in dollars.
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I’m starting to think the markets make way more sense than we realize. Very curious to see how people feel about this take.
Most of the country is just idiotic when it comes to this pandemic and they don’t understand the implications of this health crisis. That much is true, and we all know it. But, the economic crisis is not because 500K-1.5M people might die, nor is it because 100-250M people might get sick. It’s only because of society’s reactions to it - shutting down, spending less, and selling stocks. So while the health crisis is every bit as bad as we all suspect, the economic crisis very well may not be. Largely, Americans under 60 don’t give a fuuuuuuuck. They all think they’re going to be fine, I bet even 75% of the ones with comorbidties think they’re healthy.
They don’t care if 1-2M Americans die, as long as it’s not them or a loved one, and they don’t think that’s actually going to happen.
So I think the economic impact is possibly going to mostly be limited to stuff that’s mandated to stay closed or at reduced capacity - restaurants, bars, theme parks, sporting events, etc… and some of that stuff is going to be open in red states anyway.
If I told in January you that bars in half the country would be closed for an average of 1 year, restaurants would be operating at 25% capacity but doing 50% more takeout, theme parks would be closed for 1 year and sporting events would have no fans for one year, how much would you have said the markets should be down? We were about 15% off all-time high before the Moderna news, and if you factor in the stimulus pumping it up, maybe a 20-25% drop was priced in. That seems like more than enough for that scenario.
Finally, the one argument for the deaths mattering to the stock market is that you’re losing workers and thus productivity. But, actually, you’re not losing that many. In NYC (which is maybe the most trustworthy data we have available) 73% of the deaths were retirement age, so you can’t even really make the workforce argument. So at 27% of the 500K-1.5M deaths being working-aged, we’re talking about 135K to 405K workers dying, which is less than 1/3 of 1% of the work force.
So on the low end of that, if I told you in January that we were going to have a really bad flu year and maybe 4-5 times as many people would die of the flu as usual, what would your thought have been in relation to the economy? Because that’s probably about the impact this has on the workforce.
Basically the question is how broadly are we going to have to shut down again, and if it’s done with more of a scalpel than a sledgehammer, and for a shorter duration than this first one (all likely IMO), the economic impact will be much less severe.
Another point to be made is that most of the businesses taking it on the chin will be small businesses, and that might present just as many opportunities to the big corporations as it presents challenges. Also if you’re valuing stocks based on future earnings, and you think this is mostly going to be contained to the next 1 year, it’s just not as big of a deal as we all feel like it should be.
Also keep in mind that while this will negatively effect some sectors of the economy, there will be winners too - Amazon, Zoom, Quest, etc… So some of the losses sustained elsewhere will be made back there.
tldr; Americans are selfish and stupid, money rules all else, thus we are in the process of de-linking the health crisis from the economic crisis and the markets might actually be functioning rationally at this point as weird as it feels. The two big questions are: do we have to do more major nationwide shutdowns and can most of this be contained economically to the next 12 months?
Okay, that’s where I’m at right now. Let’s see if that convinced anyone that perhaps the markets are not wildly overpriced right now.
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I think this is a good post and I do think a lot of that is definitely why we see the price action we do. The three questions that I think really control whether or not this is an economic blip or something much more severe are:
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The US economy is largely based on a consumer that is willing to consume 105% of their income. Does this economic shock make people change their behavior and save more? A small decrease in consumption would be devastating to pretty much the entire US economy. If we still have a large amount of unemployment a year from now let’s say that will also affect consumption by the unemployed people and the people scared of becoming unemployed.
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How long will Covid-19 last? Will there have to be additional shutdowns? How long until a vaccine?
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How does the rest of the world handle Covid-19. US publicly listed companies are global at this point. Does Covid-19 making a rolling trip across the globe for a minimum of probably 2 years affect supply chains? Does it affect prices of imports? Does it affect demand for US exports? When the rest of the civilized world has this under control in the fall and USA #1 is still stacking bodies are we going to be banned from entering other countries? Will people travel from abroad here to go to Vegas or Disney?
I think a lot is up in the air on all of those. In my opinion the market has basically priced in most of the best case scenarios. Scenarios where we are back to normal roughly worldwide in 12 months. There are a lot of likely scenarios where this lasts much longer and impacts the economy for much longer than that. If we can really have 30m+ unemployed and then return to full employment within a year or so it will be a first. A lot of businesses are going to close for good and with it go a lot of jobs that have to be created elsewhere and that typically takes time. We are also likely to add another 5-10T in debt in 2020. Does that matter at all?
My guess:
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Some people will alter it a lot, many may alter it a little, most will make few or no changes. I won’t believe polling on this either, it strikes me as the type of thing where like 80% of people will say they’re going to save more and then two days later they’ll be drinking a $5 latte and looking at ads for new toys they don’t need but have to have anyway. "Yeah sure I’ll save some extra oh my God is that a new XBox system? Fuck it, that’s what credit is for!’
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Yeah these are my big ones too. My guesses are 12-18 months from now, but I think we’ll be in the beginning of the end of it (which makes a huge difference to consumers) in 7-9 months because I think the vaccines will likely be available this fall for the wealthy and early next year for the rest of us. I think there will be more shutdowns but less severe and more local/regional. I think people are over it and the consensus is fuck the poor and fuck the olds. It’s a stupid consensus, but none of us are new here.
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They’ll handle it better with more restrictions but also better compliance with masks and such that allows for more reopening. My guess is most supply chain issues will be isolated and contained globally in the developed world. People will starve to death in Africa, but we won’t run out of new cell phones to buy, let alone food. The US is a possible exception, but unlikely. We’ll be banned for some travel is my guess. Business will still be conducted, maybe with 2 week quarantines or lots of tests. If business is important enough to warrant flights to Europe or Asia, it’s important enough for money to be spent on testing.
Depending on how this reopening goes we don’t really have 30M unemployed, a lot are just furloughed for all intents and purposes. I think we may see double digit unemployment for a while but also this is where the concept of winners and losers in the business sense comes in. Lots of people in the service sector will be unemployed, but Amazon will need warehouse people and delivery people.
I think Congress will do just barely enough to keep those people afloat til a vaccine. It’ll be a day late and a penny short, but people will be able to make it despite that.
As for the extra debt I think it’ll be ok but who the fuck knows? Usually those chickens don’t come home to roost right away, although they may have to get in line to do so. It’s worth noting the rest of the world has a vested interest in keeping us alive economically, too. So we may manage to get some debt relief, and the cost may be more geopolitical than economic.
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I completely agree that the unemployment number is going to come down fairly rapidly but the question is how fast and how close to full employment can we get. I think some small businesses and a lot of restaurants close for good during this. Hell I lost a filling over the weekend and called my dentist yesterday morning and was surprised to find out they permanently closed the office. Prior to Covid-19 this was a bustling office with provably 10 or so employees. My best guess is she was in her mid 50s and realized dentistry in the Covid era was going to be a nightmare and pulled the plug. Do these people land elsewhere immediately? Probably not because the demand for dentists isn’t going to be the same until this is over.
The same thing goes for restaurants. It seems very unlikely we see new restaurants opening during this so those who shut their doors result in a semi-permanent reduction in jobs. Industries like Oil ans Gas, Aircraft and Airlines are going to have long term layoffs and in many cases those furloughs are now becoming permanent.
So some jobs come back, and some jobs don’t. The ones that don’t are basically permanently lost until some point in the post-covid era. I would guess we stay in the 8-12% unemployment range for a couple years as my best guess. Now how all that affects the actual stock market is really anyone’s guess but I don’t think there has been a time in our lifetime with a booming stock market and high unemployment.
I think many of the things most people think of as “the economy” are a shockingly small piece of the overall pie.
Before this all started, American Airlines was in the best shape its ever been, and its market capitalization was $12 billion. The entire commercial airline industry was valued at something like $70 billion.
Amazon’s market cap is $1.3 TRILLION, 20x the entire value of every commercial airline BEFORE the crash. Apple - $1.4 trillion. Microsoft - $1.4 trillion (!!!). Google - $950 billion. You get the idea.
Entire industries are a drop in the bucket. Restaurants included.
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I will qualify that when you say a drop in the bucket that is true stonks-wise, but in terms of GDP, employment, and economic activity they are not.
How much can the corporate oligarchy flourish while the rest of the economy tanks? It remains to be seen.
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But job losses in these industries (that don’t really have a primary effect on the stonks) eventually mean less people buying new Iphones or buying trash on Amazon after 3 glasses of wine right?
Probably? But maybe not? Poors have been getting shat on my entire life and they keep buying all that shit somehow.
Also fed will just bail out the banks when all the poors start defaulting en masse.
I guess its nice how Fidelity forces me to take a timeout every time I sell anything in my IRA - by keeping my money in “pending” seemingly forever.
Looks like somebody tried to file for unemployment using my SSN and information. I’ve already reached out to the employment security department and let them know, and put a freeze on my credit reports. I think there’s a couple of other things to do as well. Supposedly this is a major deal right now.
This is really bad. You need to do the following in my experience.
Call your bank and put a hold all all new credit.
Call the three majors credit agencies and do the same.
Change all your passwords to any financial account.
Notify your local police force you have been a subject of identity theft. They won’t do anything but it sets the stage is the worst happens.
This kind of thing is usually just a minor inconvenience but in some cases can literally destroy your life. I wouldn’t take it lightly.
I received a letter from ESD with some resources for unemployed folks. My firm also received stuff from ESD to confirm I was unemployed or whatever they send to employers when an employee files.
Yeah, I’m in the process of doing all that.
My wife works for a state agency, they’ve had about 50 fraudulent claims for an agency of about 800 people. One facility in her agency had 10 out of 100 employees have fraudulent claims filed.
Sorry this happened. I have a friend who this sort of thing turned into a decades long nightmare.
There’s been enough breaches of data throughout the years I figure most SSN have been compromised.
Indeed. Also run your emails through here